Codifying home performance
As states and local jurisdictions update building codes, more energy efficiency requirements are being adopted. These changes sometimes flow down to impact deep retrofit and remodeling requirements which affect all performance contractors. However, these changes also provide an opportunity for BPI professionals to expand performance testing services for builders and remodelers. In many jurisdictions, BPI Building Analyst, Envelope or AC/Heat Pump professionals are specifically identified in the code to perform infiltration and duct sealing tests. Keep your eye on future editions of Performance Matters for more information.
Most notable has been California, whose nation-leading standards approved May 30th include better insulation, lighting, air-conditioning systems, and building infiltration requirements. The amended standards, to take effect in 2014, are projected to reduce energy consumption in new construction by 25 percent or more, compared with standards approved in 2008. More on the California code: Sacramento Bee (overview), SFGate (editorial in support), Wall Street Journal (editorial against).
More regional developments:
- Ohio's residential code was updated to raise insulation values for exterior walls and basement walls, and to mandate that homes meet an air-tightness standard based on a blower-door test.
- In Washington, a circuit court upheld a federal court ruling in support of the state's 2009 adoption of standards for increasing the energy efficiency of homes. Builders had contended that the standards would drive up their costs and home prices.
Foul summer weather has been a boon to HVAC businesses, as well as raised new questions about the long-term sustainability of reliance on our beloved air-conditioning.
From Colorado wildfires, to the 10-state derecho storm system, to the heat wave blanketing much of the country, devastating weather conditions have caused widespread power outages and heat-related deaths. A cause and effect alike of those outages is air-conditioning, which now accounts for nearly 20 percent of U.S. electricity use, according to this Washington Post article about Losing Our Cool, a new book by Steven Cox.
Looking ahead, weather extremes are expected to worsen. Over the short term, the El Nino weather phenomenon could strike again as early as fall, according to climate forecasters. Over the longer term, rising electricity use worldwide will increase pressure to invest in the electrical grid, focus more on renewable energy and reduce greenhouse gas emissions. The Center for American Progress outlines some of those investments here.
HVAC contractors considering transitioning into full-service home-performance contractors may wish to check out this webinar on June 17. Sponsored by Efficiency First; $50 for non-members.
Searching for home-performance contractors
Have you done a Google search for businesses like yours lately? In "It's a Google World for Home Performance Contractors," Energy Circle's Will Mallett writes that pay-per-click advertising seems to be dominating region-specific searches for the likes of "insulation contractor" and "energy audit."
"Google is the biggest search engine in the world by far, and is the number one source that people use to find local businesses in their area. If you want to take advantage of that search traffic, you probably want to play ball here: get a basic PPC campaign going, and take control of, and manage, your Google+ Local listing." More on home-performance marketing from Energy Circle PRO.103 million existing homes: the scale of the challenge
How to meet "The 2030 Challenge" of renovating existing buildings to halve their use of fossil fuels? Simply perform "leading-edge energy retrofits on about 1.5 million existing homes per year," write Alex Wilson and Allyson Wendt in Environmental Building News.
To the lay person, "brand strength" may seem like an intangible that is tough to measure, though you should not for one minute underestimate its importance to your business. It is the path to commanding a premium for your services. Consider the Lexus sedan. For a number of years, the Lexus was basically the same car as the Toyota Camry, but cost a heck of a lot more. The difference? Brand strength. The company built the perception that Lexus meant luxury, that a consumer had "achieved something" simply by owning a Lexus.
The same can apply in our industry. Regardless of your position in the home performance space – whether your company began as an HVAC contractor that has embraced the home performance industry, or you recently opened your doors as an "energy audit only" operation – the strength of your brand will be critical. It will be a major factor in how long you sustain success in your market, how much you can charge for your services, and how well-defended you are against the up and coming competition.
Strong Communication = Strong Brand
You will need dedication and a commitment to regular, consistent communication to influence how people think about your company. One direct mail postcard every six months, or one billboard on one highway, is not an effective means of building brand strength. When you commit to positioning your brand as a leader in your industry, with appropriate messaging and a consistent, aggressive communications plan, then you'll have a good chance of affecting the way the market perceives you. Here are some communication tips and messages that you can use to help your brand thrive, even in the face of widespread competition.
Send out communications, like newsletters and e-newsletters that share relevant sustainability information and identify "green" trends. This will allow you to open a dialogue with your customers. Ultimately, they will turn to you for the information they want, and start asking questions. This is the kind of relationship building that fosters strong customer relationships. As we all know, relationships build loyalty. By giving your customers the information they seek, you establish yourself as a trusted industry leader. Plus, a communication like a newsletter can generate leads and sales if developed properly.
Develop your "Creation Myth" to make your company history come alive. Focus on the green initiatives you've undertaken and how you came to be your area's premier home performance company over the last few years. You can drive this point home by including success stories on your website, creating a timeline section that highlights the important milestones in your company, and by aligning all of your employees around the company story so they speak it and live it when talking with customers.
Seek out Memorability in Marketing. While you may not have a marketing budget to support a major broadcast initiative – TV, radio, billboards, etc. – you can still have long-lasting impact by seeking out creative avenues to display your company. Explore local trade shows where you can engage and interact in fun ways with prospects. Get involved with local organizations (Little League, Boy Scouts, etc.) where you can bring your message to the grassroots level, showcase your company as an important part of the community, and build long-lasting relationships with potential customers. You don't have to spend tons of money to get in front of your audience. But you do have to get creative (and put in some sweat equity) if you want to be memorable and strengthen your brand.
Go above and beyond with your energy-efficiency services, and communicate that added difference. Don't just position your company as "an energy auditor who replaces HVAC systems and caulks windows." Focus your communications on the cutting-edge sustainability work that your company is doing. Talk about the advanced, hi-tech energy savings services that you provide. Don't lose sight of what is going to motivate consumers to think about you above all other companies AND motivate them to buy.
Build loyalty with honesty. Make sure everything you say has substantial supporting evidence, and maintain company integrity at every step of the sales and execution process. Consumers appreciate true transparency and will respect your brand because of it.
Building your brand is like building a house. Every communication piece, every job completed, and every conversation your employees have with a prospect or a customer is a brick in building your "brand house". Strong houses will be around much longer than weak ones. So will strong brands. Invest the time and energy into building a strong brand for your company, and you'll be well-positioned for success for years to come.
If you'd like to talk about your strategy for building your brand, or have questions about any information I've shared in this article, please feel free to email me at email@example.com.
Last month Tom walked us through convincing your techs that you are not over-charging the customer – really! This month Tom shows us how techs routinely under-bill the customer.
If I told you that your techs were under-billing your customer by $10-$30 per hour, you would probably not believe me. Well don't trust me, see for yourself. Let's look at some very simple questions that will help you determine if your techs are under-billing the customer.Question #1: How much should your techs be billing per hour?
Let's determine your Equivalent Charge Out Rate. That is the amount of money each service tech should be bringing in for each hour they actually charge the customer. To determine that number, add the hourly rate you charge (time and material, or the internal rate if you use flat rate pricing) to the average parts sales per hour. Average parts sales are about $21 per hour. Now add the average mark-up on those parts, which usually averages 100 percent. Lastly, add the trip charge or diagnostic fee if you use flat rate pricing. In our example, we waive the diagnostic fee about 60 percent of the time so we will only use 1/3 of the total amount (don't do this if your pricing doesn't take it into account). Let's assume your hourly rate is $125 per hour.
Hourly rate -------------------------------------------- $125.00
Parts per hour sold -------------------------------------$21.00
Mark-up of 100% on parts sold ------------------------$21.00
1/3 of the $60 trip charge or diagnostic fee -------------$20.00
Equivalent Charge Out Rate = $187/hour
This is telling me that for every hour my tech bills the customer, he or she should be generating $187 of income.Question #2: How much is the tech really bringing in per hour?
Take any period of time. To keep it simple, let's look at one tech for a week. Look at your service tickets and simply add up the total income he or she generated for the week, and divide it by the actual number of billed hours - not the hours worked, but the hours billed.
The tech's gross revenue for the week was $3,244, and he billed out 21 hours for the week. That means the average income per hour generated by the tech was:
= $3,244 / 21 billed hoursQuestion #3: How much is the tech under-billing costing our company?
= $154.47 / hour
Remember, our goal was to generate $187 per hour, so how much is the above tech costing the company in terms of under-billing per year? Let's assume the tech bills out half his time for the year, or roughly 1,000 hours. This tech under-billed the customer by this amount:
= ($187 - $154.47) X 1,000 billed hours
= $32,530 per year
It seems hard to believe that our tech under-billed the customer by $32,530 – but he did! Check out the numbers at your office and see what you find out. The numbers may be staggering.
Another reason for under-billing is that the service tech simply does not believe the rate you are charging the customer is fair. If they think the rate is too high and can't justify the number in their mind, they will tend to under-charge the customer.
One way to help your tech understand why you need to charge what you charge is to have them watch the DVD "Why Do We Need to Charge So Much?" Order a copy and share it with your techs. If they billed out one extra hour this week because they listened to the DVD, they just paid for the DVD several times over! The DVD normally sells for $99.95. This month, it is our featured item at the discount price of only $75.00 plus shipping and handling. Please enter 'BPI' as the Coupon Code at checkout.
If you want to learn more about how to track the performance of your technicians, attend a free webinar overview of the ProfitMaxx software. Give us a call or check out our website at www.GrandyAssociates.com/ProfitMaxx for more details.
Congratulations to Kevin Hanlon of Horizon RES NH LLC in Concord, NH for providing the correct answer and proper evaluation of last month's stumper! There were a number of great responses, but Kevin's illustrates the most comprehensive understanding of the problem. As a reminder, Ken Tohinaka of the Vermont Energy Investment Corporation provided this tricky scenario (scroll down) and asked readers to evaluate the use of a bio-mass boiler and additional insulation in reducing ice-dams and increasing the building's efficiency.
Kevin suggests that a bio-mass boiler "wouldn't make the building more efficient, it would just be a heating system that would be more efficient at contributing to heat loss and ice dams."
Kevin also notes that additional insulation might not solve the problem. Additional insulation "is not the answer unless the pressure barrier of the ceiling assembly of the additions was fixed first, and proven to be complete and effective."
Finally, Kevin explains that a visual inspection, blower door pressure test across the attic, and a pre and post data logging exercise would be good ways to determine the cause of the ice dams and ultimately determine an appropriate solution.
Ken adds that it is important to recognize "the trombe wall which extends above the attic floor plane, the wood shop vacuum, and the auto shop ventilation systems that depressurize the additions."
"The streaking in the fiberglass batts, particularly at the juncture of the additions, indicates that heated air from the classrooms is being drawn into the main attic by the shop equipment, adding to the heating from the trombe wall extending above the attic floor plane. The air is then pulled into the shops by their mechanical equipment through insulation and dropped ceilings."
What's Wrong with this Picture?
The infrared image below (left) was taken by Jerritt Gluck of Bonded Building & Engineering. The concrete slab (right) had recently been drilled by a steel contractor, after which the following occurred. What is wrong with this picture, and what's the solution? What steps should the contractor and installation crew have taken to avoid this?